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To determine the worth of a business, one must consider a few factors. For one, a business is only as valuable as its ability to provide an income in the future for a buyer. Other factors like what equipment does the business own; what is its inventory; profitability trends matter as well? Market comparables will also be important in understanding what your business may ultimately sell for.

Next, a good set of books not only helps determine where the value lies but makes a business more valuable, in general. A valuable business is one that can accurately inform a potential buyer how profitable it is and has been at any given time and how it will perform into the future.

Additionally, revenue is a good lead measure of a business’s worth but not the most black and white. If a business has gross revenues of $500,000 per year, however if it expenses are $495,000 to keep a business afloat, then $5,000 net profit it is not a highly valuable business. This is why any broker would seek to adjust your profit and loss statement in order to understand true earnings and other factors to determine valuation.

Once each of these elements is estimated, then intangible assets may either have an upward or downward pressure on the market value. For instance: location, economic conditions, competition, goodwill, lease terms, and customer loyalty and diversification can add or subtract from value.

In essence, a business’s worth is a combination of its earnings and its good standing in the community. Although there is no simple answer to valuing a business, a Transworld Business Advisor can help you understand your business’s potential market value.

There are five simple, yet important, steps to consider when selling your business:

Organizing Financial Documents: Well organized books, balance sheet, and a clear outline of all assets will not only streamline the valuation process but will also make your business more appealing to potential buyers. Therefore, before listing, make sure all of your financial documents are in order.

Understanding Market Value: In order to list your business, you must first understand business valuation. What sets your business apart? What makes it profitable? What have other businesses like yours sold for with similar revenues and profits? Not only are these details important for determining what your business is worth, but essential to the success of your slae process.

Exit Strategy: It is important to plan an exit strategy even before you believe you might want to sell. The unexpected can occur and having a solid plan can ease the process of listing and selling. For instance, a business owner may become ill, lose interest, or maybe the hopes of passing the business along are unlikely as your children have passions in different careers. Therefore, a well-planned exit strategy can make the process of selling down the road much less stressful.

Boosting Revenue and Sales: The best time to sell your business is when your sales are at their best. You would be hard pressed to find a buyer willing to take a shaky business off your hands. If sales are declining, you should avoid listing your business. If you are hoping to sell soon but have had trouble boosting sales, consider speaking with your broker about marketing methods to help increase attraction and customer retention.

Business Broker: Transworld Business Advisors are not only equipped in both the buying and selling process but have specific expertise in most industries. Therefore, they are not only interested in helping you sell your business quickly and at the best price, but they have the tools to do so. Not only will they help ease the process with professionalism and experience, but Transworld also has a network of interested buyers ready to make an offer on your business.

Finding out the worth of your business is the first step toward preparing it for a sale. Transworld Business Advisors offers a free business valuation, which can shine a light on where your business stands. Your business broker will assess the following to find the value:

• Net profit
• Business model
• Growth trend
• Competitors
• Company assets
• Customer retention and loyalty
• Age of business

There are two commonly used benchmarks to calculate a business’s worth: Compare the sale price of similar business to 1) your company’s annual sales resulting in a percentage of sold price vs sales or 2) annual recasted profits resulting in a multiple of earnings.  Our business value calculator program can then generate a report that can be reviewed.

It is impossible to do a thorough and accurate business valuation without keeping in mind the current market, its trends, and all other assets owned by the business. For instance, trademarks, furniture, commercial real estate, patented technology, computers, and other equipment. In fact, even intangible assets like public perception and public brand awareness come into play when ultimately determining the value of your business. To properly give a value to these intangible assets, you should speak to your business broker, who has experience in this area.

A business broker, on top of helping you find the value of your business, can help you maximize its worth. For one, business brokers know what buyers are willing to pay, what they are looking for, and how they like the information presented to them. Transworld brokers can help you determine what your company is worth, and then they can help you sell it to the best possible buyer.